From Quantitative Easing To Commodity Prices

In recent years, a song named "disturbed" has become popular rapidly.

Because one after another, "with a knife and a knife", there are not many people who sing, but many people like to listen.

Therefore, we may have more understanding of the word "perturbed".

In fact, no matter it is "nervous" or "disturbed", it is used to describe uneasiness, so it always appears with the word "disturbed".

If the word "Jian" is "demolished", there will be more or less differences between "Xing" and "Zhi".

In short, often pressed, this heart is not comfortable.

Associated with today's international commodity market, the fear of price inflation is more suitable for the past few days, and the fear of price slump is more appropriate to describe "worry".

From the present point of view, concerns about the trend of commodity prices in the international market are manifested as "both" and "apprehensive".

The root cause is still in the root.

As international

Objectively speaking, the US quantitative easing policy is like analgesics, which will create some opportunities for the recovery of the US economy in a short time.

For example, in February 2011, the US manufacturing production index increased from 93.1 last month to 93.5%. In March, the purchasing managers index of Chicago reached 70.6, 0.6 higher than the expected value, while the unemployment rate in March dropped to 8.8% from 8.9% last month, or 1 percentage points higher than the October 2010 before the implementation of the second round of quantitative easing policy.

As many Americans at that time believed, the US economic recovery was clear, the recovery was more solid than ever, and the Fed's confidence in the economy was also enhanced, the second round of quantification.

It should be noted that ending the second round of quantitative easing does not mean that the Fed has categorically rejected the third round of quantitative easing policy.

Not long ago, Bernanke, chairman of the Federal Reserve, used the word "slow and frustrating" to describe the speed of US recovery in assessing America's economic performance last week. Therefore, the United States still needs loose monetary policy to boost the economy.

The latest figures released by the US Department of Commerce show that the US economic growth rate slowed down significantly in the first quarter of 2011, only 1.8%, indicating that the pace of recovery of the business sector and the US family sector is still inconsistent.

Among them, the core personal consumption expenditure price index rose 1.4% compared with the same period last year, less than 1.5% of the expected value.

The US construction permit was revised down 1.9% in April compared with last month.

Figures released by the US labor department also showed that the number of initial jobless claims increased by 10 thousand to 424 thousand in the week of May 21st as seasonally adjusted.

In view of this, for the Fed, to completely and completely bid farewell to quantitative easing, this unconventional monetary policy tool is still very entangled at this stage.

In June 30th, when the second round of quantitative easing policy expired, it would not rule out the possibility that the Fed would directly or indirectly introduce the third round of quantitative easing policy in a disguised way.

Of course, the introduction of the third round of quantitative easing policy is likely to form a time lag with the West Bank's quantitative easing policy.

In fact, the end of the first round of quantitative easing policy of the Fed and the beginning of the second round of quantitative easing also had a 8 month lag.

Nowadays, the whole world is concerned about whether the Federal Reserve will further introduce a new round of quantitative easing policy.

It is not because people all over the world are fed up and have spare time to work hard for the future of the US economy, mainly because in the era of economic globalization, the US economy plays a very important role in the world economy. Many people in other countries fear that the US recession will bring disaster to the pond fish.

Therefore, if the Fed really wants to make any new moves in monetary policy, it will make the outside world restless.

Now it seems that it is precisely because the Fed has a vague attitude towards whether to launch a new round of quantitative easing policy.

In fact, it is not difficult to understand that with the large number of financial derivatives being used in bulk commodity trading, commodities in the international market in recent years

From a direct perspective, if the Fed can throw out a new round of quantitative easing policy in the near future, it will obviously make a good contribution to the commodity price trend in the international market fundamentally.

There is no doubt that the new round of quantitative easing will play a role as a pacemaker in restoring the sustained growth of the US economy.

As the largest economy in the world today, as long as the US economy has not fallen, the development of the world economy has also taken root.

However, the possibility that the Federal Reserve will withdraw from quantitative easing policy will still be quite large in the future. The reason is that many problems in the US economy can not be solved simply by "no bad money".

It should be pointed out that, after the impact of the international financial crisis, the US government has not made much progress in advancing the US version of the "pformation of economic growth" mode. In developing the real economy, it has only helped GM in saving the auto industry. At the same time, it issued a "five year export doubling plan". For those investment banks that were rescued from life and death line, it seemed that the scars were forgotten and the enthusiasm of these institutions for speculation was still high.

{page_break}

Now, as long as the way of economic growth that the United States relies too much on consumption does not change fundamentally, no matter how many rounds of quantitative easing policy the Fed throws, it can not fundamentally stimulate the endogenous driving force of economic growth in the United States. Instead, it will "addict to addiction" to the excessively loose monetary policy and eventually shake the trust of the international community to the US dollar.

If the position of the US dollar as the most basic reserve currency in the world is impacted, the United States will probably lose its dominant position in the world economy as well.

If this is true, it will be a loss to the United States.

Thus, in the coming period, the Fed's monetary policy orientation also needs to swim between China's "growth guarantee" and "adjustment structure", so that the possibility that the Federal Reserve will throw or not throw out a new round of quantitative easing policy in the near future will exist.

Since the fundamentals are not very clear, then, as a barometer of the world economy, the trend of commodity prices in the international market can not be overly bullish or overly bearish.

That is to say, the trend of commodity prices in the international market will not appear in the past few years, and there will be no bear market characteristics in the second half of 2008.

For example, the price of New York crude oil dropped sharply after the war in Libya hit a high of 117 dollars per barrel. With the Japanese earthquake, Laden being killed by the US commando in Pakistan and the arrest of Kahn, President of the International Monetary Fund, the international oil price jumped up and down nearly 100 dollars in the past 3 months.

As of the end of June 17th, New York crude oil even fell to the position of $93 per barrel.

In other words, the price of silver which had been sold in the early stage was only 12% in a trading day.

In fact, Goldman Sachs issued a report in mid April this year, advises investors to stop buying and reducing bulk commodities, because crude oil, gold and copper prices will fall in the next 3 to 6 months.

The consequence of the Fed's uncertainty about whether to continue to implement quantitative easing policy is very serious. Besides fundamentals, it also affects the trend of commodity prices in the market.

As we all know, the United States is the richest and most frequently traded financial derivative country in the world. For the use of financial derivatives to speculate on commodities in the international market, if the Federal Reserve bid farewell to quantitative easing policy, it will inevitably produce a certain effect of pumping money from the supply of funds.

Now, the US Federal Reserve is not very clear about whether to withdraw from quantitative easing policy. Naturally, there will be differences in the direction of speculation on commodities in the international market, and the trend of commodity prices will naturally be even more disturbing when doing more acts and shorting behavior alternately.

In addition, the Fed's ambiguous attitude on whether to end quantitative easing also affects the subject matter of commodity price movements in the international market.

To date, whether the demand for hedging or the need for speculation, the trend of commodity prices in the international market will respond to varying degrees of changes in the exchange rate, employment rate, trade balance and capital market.

Now, it seems unclear whether the US quantitative easing policy will continue. This series of subjects will naturally not be clear.

Now, of course, the international market is very complicated in terms of the disturbing situation of commodity prices. Therefore, it can not simply be included in the Federal Reserve.

In fact, the failure of quantitative easing policy is only a key factor affecting the trend of commodity prices in the international market, but not all of the key factors.

In fact, there are many factors as early as the international market commodity prices of "fear" and "Te".

On the one hand, from the perspective of commodity price movements, the political upheaval in the Middle East and North Africa has obvious support for the current international market price trend.

As one of Africa's largest oil producing countries, the impact of Libya's war on international oil prices is no longer confined to psychological panic. At present, Libya's oil pportation facilities have basically been paralyzed, and the international oil supply has been seriously affected.

As OPEC is unable to reach a consensus on increasing production, even if the international oil price falls, it will soon hit the invisible limit.

On the other hand, from the aspect of the commodity price trend, the Chinese government emphasizes the need to change the mode of economic growth in the process of formulating the "12th Five-Year plan", or even to reduce the average annual economic growth target from 8% to 7%. This is also a cold water for the speculation of China's demand.

Of course, the spread of the European debt crisis will also largely affect the demand for commodities in the international market, which is not conducive to supporting commodity prices in the international market.

Besides, there are many other factors that will affect the international market commodity price trend, but it is difficult to say in one or two sentences that it will constitute positive or negative.

As a country that has just been overtaken by China and pformed from the world's second largest economy into the third largest economy, earthquakes, tsunamis and nuclear radiation will undoubtedly add to the worsening Japanese economy, but the post quake reconstruction will stimulate the Japanese economy to a large extent.

The killing of Al Qaeda leader Laden in Pakistan actually helped to eliminate a dangerous point threatening the US economy, but the retaliation that might result from it would also make the operation of the US economy uncertain.

In short, the recent quantitative easing policy in the US remains to be solved by the Federal Reserve.

However, in connection with the trend of commodities in the international market, even though the Fed's voice is very heavy, the Federal Reserve can not say that it can do everything independently.